What happened
Shares of Altaba (AABA) were trading at $19.58 as of 11 a.m. EDT Tuesday morning. That's 72.3% below Monday's closing price. But the drop includes a massive dividend payout as the financial asset manager prepares to dissolve. On a dividend-adjusted basis, Altaba's shares are actually trading 1.5% higher today.
So what
As announced three weeks ago, Altaba paid out a dividend of $51.50 per share after the closing bell last night. The investment management fund formerly known as Yahoo!, whose largest holding was a 15% stake in Chinese e-commerce giant Alibaba (BABA 0.09%), is winding down its operations in order to dissolve on Oct. 4.
Image source: Getty Images.
Now what
This huge dividend payment was an important step toward closing the books for good. Trading of this stock will be halted when the dissolution takes effect, and the fund's transfer agent will register the shareholders at that time as the recipients of whatever further dividends and payouts might come. A skeleton crew will continue searching for ways to minimize the taxable costs of transferring Altaba's mostly Chinese cash to a heavily American investor base.
That process could take years, and Barron's argues that the potential gains are likely to stay below 15%. For most of us mere mortals, there's no real reason to stay invested in Altaba at this point. For shareholders who want to stay connected to Alibaba's business, it might make sense to simply sell this stock and reinvest the proceeds directly into Alibaba. That stock trades on the NYSE nowadays, after all.
